Investing £10k for Two Years


#1

Ok fellow Monzoites…

I have had an investment plan I set up for my son mature today and it paid out around £10k. I intend to give it to him when he is 18 so we have a couple of years to hold onto the money. How can I maximise my returns?

I know you can’t offer financial advice, but anyone elses experiences would be great!


#2

Good question! I think that any suggestions would largely depend on whether you’re looking to protect the money (so savings interest) or whether you might like a bit more risk for potentially greater returns - but knowing that you could lose some / all of the money (in which case a stocks and shares ISA might be a good bet).

There are other options (like peer to peer lending) - or you could split the 10k and spread your bets!


(Graham - Mental health professional) #3

I wouldn’t do anything other than a Cash ISA. Nothing dramatic - two years tax-free and your lad can continue saving some of it going forward.


(3 Round Investor) #4

Take a punt on premium bonds a former work colleague remortgaged his house a few years ago and put the capital in premium bonds while waiting for works to be completed he won £500 a few times this option provides capital security plus some potential upside if you win a prize


(Drew sanders) #5

If your talking 2 years then premium bonds or cash savings are probably best. If your child is 16 then they could open a stocks & shares ISA and they could look at saving for a little longer time frame.
If you could find the next big stock then you could make a lot of money or lose it all.
My biggest gain is 220% in 2 years with £4K invested for my son. My daughter lost 99% of £1k over same time frame.
There is of course savings bonds & fixed savings for 2 years.
To be honest in current times your not going to make a lot of money with interest rates as low as they are.


(Nikhil velani) #6

Atom bank offer a 2.15% for 2year fixed saver not bad hopefully monzo will be doing something like that soon.


(Jack) #7

Although I very much doubt they will offer this directly and it’s almost been confirmed they won’t. We will still have access to such rates and accounts through the Monzo marketplace :bank:. Hopefully with seamless sign up and integration into the Monzo experience.


#8

I read somewhere that the human brain doesn’t fully mature until 25, which might explain why so many people get into a bad situation with debt in early adulthood. This would also explain why I completely spunked the lump sum my grandma gave me when I was 18.

With 15-20 years of hindsight, if I had money to give my future grandchild I would probably keep the money in my name for another 7 years till the child’s brain has finished growing, but invest it in a small portfolio of dividend paying shares, maybe 5 ftse250 listed shares (not too big to have the lowest yield, not too small to be overly risky or hard to trade).

These days most brokers will let you specify an account for the dividends to be paid to, so if you set that to your son’s account he could have small amounts of £30-50 dropping into the account 10 times a year (if those companies pay interim and final dividends). You might also find that in 7 years the value of the portfolio may have grown as well. Obv it could fall as well but with time that is less likely.


(Graham - Mental health professional) #9

Yep. Interest rates are pitiful so there’s no killing to be made in the two-year time frame. Atom Bank is pretty much as good as it gets currently but don’t expect a buzzy app. :slightly_smiling_face:


#10

I read that Premium Bonds offered a lower return than a mid interest savings account.

That obviously doesn’t stop my wife having them, the idea that she could “win big” is more appealing than a few quids interest.

But… If you want guaranteed returns, avoid Premium Bonds.


(Tom Halloran) #11

Might be worth looking at the P2P lenders, see: https://www.moneysavingexpert.com/savings/peer-to-peer-lending/

I’ve used Funding Circle and found it to be good - I like that you can get your money out pretty quickly by selling the loans on the secondary market (like a few days in my experience).

Obviously don’t take this is financial advice since it involves risk (for example: recession > small companies going under > loans going bad > loss of capital and delays to loan repayments), but if you are looking for something more than just savings they might be worth a look


(Graham - Mental health professional) #12

But be warned, your money isn’t safe with P2P lending. Your boy will never forgive you…,:grinning:


#13

Lots of great ideas here!! I will probably be boring and accept a lower return for little or no risk…but maybe just keep a grand to play with in some riskier investments?


(Tom Halloran) #14

No harm in playing it safe! Think it’ll be hard for people here to give you a steer on exactly how much to allocate to riskier investments, since it is such a personal / risk-based decision, but in general splitting between safer and riskier things in a proportion you are happy with is a decent approach


(Drew sanders) #15

They do offer low returns however your capital isn’t at risk. Therefore it is a way to maximise the savings - your not going to lose large amounts!
Unless a savings account is paying 2.5% you will lose money anyhow - it’s called inflation.


#16

But if I don’t invest it somewhere I will lose even more :slight_smile:


#17

I’m not sure it would maximise your savings, putting it in a fund which doesn’t guarantee any return - All you will be doing is protecting it from loss, with the “potential” for a bigger win fall - As you quite rightly pointed out, you’ll technically lose out if you don’t put the money in a savings account of 2.5% or more.

I recently stuck some money in a Wealthify account… It’s not performed well so far (appreciate it’s the long game!)


(Drew sanders) #18

I was merely explaining the options. Personally I would put it in an ISA stocks & shares but I’m not here to advise.


(Drew sanders) #19

There isn’t much out there to ensure growth over possible inflation.
This is not advice but look at opening at stocks ISA then invest in either a fund, ETF or an investment trust. It is a minefield but there are some safer risks & some crazy ones. If you need information on these then try www.hl.co.uk - they aren’t the cheapest though.


#20

As much as I wouldn’t generally reccomend it - I think the best thing you can do is deposit it with Atom for 2 years on their 2.1% saver.

Either that or invest it wisely.